How to Start a Gym Franchise in 8 Steps
Gym franchises are some of the most popular franchises in the country, so if you have a passion for health and fitness and are interested in joining a franchise rather than building a new business from the ground up, this could be the perfect solution.
There are plenty of gym franchises to choose from, but deciding which brand is right for you is just one of many steps you’ll need to take. Read on to learn how to start a franchise gym, pros and cons, how much it costs, and more.
How to open a gym franchise
Ready to start the franchise buying process? Follow these steps to purchase a gym franchise of your own.
1. Weigh the pros and cons of owning a franchise gym
As is the case with any business venture, there are advantages and disadvantages of franchising. Before you decide that opening a gym franchise is right for you, consider the pros and cons. It’s also a good idea to speak with current and former gym franchisees to get a better understanding of what this process will entail.
Here are some pros and cons of owning a franchise gym to consider as you make your decision:
Pros of owning a gym franchise
Brand recognition: Franchises are well-known brands with a history of success. This makes finding members a cinch—there’s already a built-in customer base. Plus, the franchisor will likely handle marketing for the entire franchise.
Training and ongoing support: If you’ve never owned a business before, there will be lots of things to learn. With a franchise, you’ll have the ongoing support of your franchisor to walk you through every step of the process.
Higher profits: Franchises typically see higher profits than non-franchise businesses, as there is a loyal customer base and formula for success. While the initial investment to open a gym franchise can be high, you’ll likely turn a profit more quickly.
Cons of owning a gym franchise
Lack of independence: When you join a franchise, you may own your location, but you are ultimately an employee of sorts of the franchisor. They have the final say when it comes to business strategy, marketing, location, decor, etc. If you’re looking to create a truly unique gym experience, a franchise may not be the best choice.
Initial investment: As we mentioned, the initial cost of starting a gym franchise can be very high. You’ll have to purchase a lot of equipment, after all. If you don’t have the liquid capital or aren’t able to qualify for financing, this will likely not be a viable option.
Ongoing cost: In addition to the initial franchise fee, you will also be responsible for ongoing payments to the franchisor. These may include royalty fees, marketing fees, renewal fees, and more. Make sure you’re aware of all of the costs involved in a particular gym franchise before you join.
2. Consider your options
If, after weighing the pros and cons, you’re convinced that buying a gym franchise is right for you, you’ll next want to consider the franchise options you have. There are plenty of gym franchises to choose from—from classic gyms to specialty studios. Some options include:
The Bar Method
Your gym franchise options will also be specific to where you want to open your business so make sure you spend some time researching the best choices. When reviewing your options, pay close attention to any requirements they have to make sure you meet them, as well as how much capital each one requires.
3. Contact franchises
Once you’ve narrowed down your options to a handful of possibilities, it’s time to reach out for more information. This can typically be done online through the franchises’s website. In most cases, you’ll submit a preliminary application or request more information.
From there, the franchisor will provide more information. This could also include upcoming events in your area to learn more about the business and speak with other people in the franchise. Remember that during the application and interview process, you should be interviewing the franchisor just as much as they’ll be interviewing you to make sure it’s a mutual fit.
If you move along in the application process, the franchisor will share their franchise agreement, which includes the franchise disclosure document (FDD). Both you and your business attorney should review this document carefully, as it will lay out exactly what both you and the franchisor are responsible for over the course of your business relationship. If all looks good, you’re ready to sign and officially join the franchise family.
4. Write a business plan
Once you know the franchise gym you’re going to open, your next step is writing a business plan. This may feel unnecessary when joining a franchise, as so much of your business will be prescribed by the franchisor. However, it’s still a good idea to put something together so you can clearly see how you’ll launch and grow your business.
There are some key points you want to make sure your business plan hits, including a market analysis of competition in the area and the need that your gym franchise will fill that’s currently not being filled by competitors. You should also include other information like expected costs, how many people you expect to hire, what your role in the franchise will be, financial projections about how long until you expect to turn a profit and more.
The nice thing about opening a franchise gym instead of starting a business from scratch is that you can likely get quite a bit of information for your business plan directly from the franchisor or franchise agreement.
5. Secure financing
The cost of buying a gym franchise will vary depending on which one you decide to join, as will the financial assistance you can expect to receive from the franchisor. We’ll explore costs in more detail below, but for now, it’s worth discussing your franchise financing options.
Chances are, you’ll need some sort of financing to get your business off the ground. While you may be required to self-fund a portion of your franchise, you will likely look to outside sources as well. You’ll have a variety of business loan options available, based on what you need to use the money for (i.e. buying property, working capital, etc.) Your franchisor may also offer guidance or their own financing solutions that you can utilize during this stage.
6. Choose a location
An easily accessible and convenient location for your gym is crucial. For most gym-goers, close to home or work is best. As to figuring out what constitutes “convenient” for your target membership, it all starts with studying the data available to you.
“The first thing to do is look at the demographics of the area,” says Montoya Jennings, operations manager for L.A. Fitness in Atlanta, Georgia. “Choosing a location depends on a lot of things: the average age of the area, the crime, and if it’s near a shopping center, which encourages more foot traffic and spending. There’s quite a bit of data to consider.”
You can utilize resources like Stats America to research everything about residents in a given region, from gender breakdown to estimated median income, which tells you whether the kind of gym you want to open will have a stable community of potential members to draw from.
Another part of the location decision is whether to use an existing structure to house your gym or to build something new entirely. In the case of L.A. Fitness, they’ll often look for a satisfactory property in a desired location, then enlist a contractor to build according to the company’s description and specifications.
Of course, every franchise is different. Make sure you consider any location requirements when choosing a gym franchise. Some franchisors will have very specific requirements or may choose the location themselves. Others will give you more autonomy.
7. Get permits
As with any business, you’ll need to obtain the proper permits and licenses to operate. These can include building permits if you’re renovating a space, as well as a number of other permits once you’re ready to open, such as health and safety permits.
In some cases, you’ll need your licenses and permits in order before you can start receiving equipment and setting up your gym. “You need to get the license to occupy, the business license for that facility, the fire inspectors to come out and do their inspection, contractors to ensure the fire sprinklers and plumbing are up to code. Then L.A. Fitness sends out its own team to install all the equipment for the facility—that team decides what goes and what doesn’t,” says Jennings.
There are fees for obtaining building permits, and other permits might be necessary as well, depending on the kind of amenities your gym plans to offer. For example, a snack bar could require employees to pass a food handling test specific to that locality.
8. Start hiring
Once the location is set and you have the proper licenses and permits to legally operate, you’re ready to hire your first employee. You’ll need a number of employees to help clean, run the front desk, manage sign-ups and memberships, and train members or teach classes, and more.
Remember, gyms typically have long hours—some are open 24 hours a day—so they’re open when their customers want to work out. This means you’ll need a host of employees to cover all the shifts and make sure your facilities are clean and well-organized.
How much does it cost to start a gym franchise?
As we’ve mentioned, the cost of buying a gym franchise can be significant. Besides the initial fee you’ll pay to join the franchise, a gym requires a great deal of equipment, as well as a large commercial space.
The total upfront investment for a gym franchise can fall anywhere between $30,000 and $300,000, including the one-time franchise name fee (ranging from $15,000 to $30,000).
Of course, some brands are less expensive than others. Ditto for some locations. For example, the initial investment for Snap Fitness ranges from $77,000 to $250,000, including all needed working capital, while Curves charges $24,000 plus an additional few thousand for equipment delivery.
Some companies have larger financial requirements: Planet Fitness, for example, asks that franchisees have liquid assets totaling at least $1.5 million, with an overall net worth over $3 million.
Royalties are another cost: Some companies charge a flat rate per month (usually around $400 to $500—again, depending on the brand) while others take a percentage of gross revenue. Royalties pay for continued use of the brand name—a huge draw for potential customers—and help with marketing, advertising, training of new employees, and other support that independent gyms have to fund on their own.
The bottom line
Starting a franchise gym isn’t for the weak-willed or those without the upfront capital. If you have the means to go into business with a brand-name gym, however, you have the opportunity to enter an industry that expects to see continued growth for years to come with the backing and support of an established name. With an independent gym, you have to start from the bottom. The head start that a franchise gives entrepreneurs is substantial—from then on, it will be up to you to fulfill that promise of success.
This article originally appeared on JustBusiness, a subsidiary of NerdWallet.
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